To WaPo, Social Security Is a Treacherous Money Sucker

Under the headline, “Social Security Adding Billions to U.S. Budget Woes,” reporter Lori Montgomery reported that “Social Security passed a treacherous milestone”–a moment where the program, largely because of the recession, spent more in benefits than it took in.

What does this mean? Montgomery tells readers: “Social Security is sucking money out of the Treasury.”

Montgomery complains that “fixing Social Security has largely vanished from the conversation” about the country’s fiscal crisis, and politicians are “ducking the issue.” She adds: “Many Democrats have largely chosen to ignore the shortfall, insisting the program is flush.”

This is the kind of language one might expect in an editorial, where papers are normally free to take a position on an issue under debate. Here the Post is declaring in a news piece that politicians who do not believe Social Security is in a crisis are wrong.

Montgomery singles out Democratic Sen. Harry Reid for a fact check:

In an MSNBC interview, he added: “Social Security does not add a single penny, not a dime, a nickel, a dollar to the budget problems we have. Never has and, for the next 30 years, it won’t do that.”

Such statements have not been true since at least 2009, when the cost of monthly checks regularly began to exceed payroll tax collections.

Economist Dean Baker weighed in at his Beat the Press blog (his takedown of the Post‘s propaganda is a must-read):

Of course Senator Reid is exactly right. The system is self-financed under the law. In 2009 it began drawing on the interest on the government bonds it held. That is exactly what the law dictates, when Social Security needs more money than it collects in taxes, it is supposed to draw on the bonds that were purchased with Social Security taxes in the past. This means it is self-financing.

Anyone in the mood for factchecking at the Post might want to focus less on Reid and more on their own reporter. Here Montgomery tries to argue that people get more out of Social Security than they put in:

The average worker spends 20 years drawing benefits. A quarter will see their 90th birthday.

As a result, the average retirees have gotten back far more in federal benefits than they paid into the system during their working life, according to research by Eugene Steuerle, a senior fellow at the Urban Institute. That return is diminishing, in part because people today have paid more into the system than previous generations. But a two-earner, middle-income couple retiring this year can expect to get $913,000 in Social Security and Medicare benefits over their lifetimes, in return for $717,000 in payroll taxes.

Did you catch that? Montgomery switches gears from talking about Social Security to talking about the media’s favorite underfunded safety net program, SocialSecurityandMedicare. Why? Because the research she’s citing shows that the couple in question pays in more than it receives in benefits.

People who read the Washington Post know this–from a January 3, 2011, piece about this Urban Institute report:

The same hypothetical couple retiring in 2011 will have paid $614,000 in Social Security taxes, and can expect to collect $555,000 in benefits. They will have paid about 10 percent more into the system than they are likely to get back.

Montgomery needs readers to know that there are no politics involved here: “No crystal ball is necessary to predict Social Security’s future. Hard numbers tell the story.” That’s a pretty rich assertion coming from someone who’s writing such a dishonest article.

Somewhat unhelpfully, deep into the article readers are told:

Social Security can pay full benefits through 2036. Once the trust fund is depleted, the system would rely solely on incoming taxes, and benefits would have to be cut by about 25percent across the board.

Well, that doesn’t sound like much of a crisis anymore, unless you believe the money in the trust fund won’t be paid back to taxpayers. Which is what Montgomery seems to be warning, since the alternatives are apparently so dire:

The $2.6trillion Social Security trust fund will provide little relief. The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing.

As Baker pointed out, this process is exactly what the government does when someone redeems bonds. The challenge for Social Security bashers is to turn these events into a crisis–and demand that citizens accept the idea that the government should not pay them back what they are owed.

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Activism Director and and Co-producer of CounterSpinPeter Hart is the activism director at FAIR. He writes for FAIR's magazine Extra! and is also a co-host and producer of FAIR's syndicated radio show CounterSpin. He is the author of The Oh Really? Factor: Unspinning Fox News Channel's Bill O'Reilly (Seven Stories Press, 2003). Hart has been interviewed by a number of media outlets, including NBC Nightly News, Fox News Channel's O'Reilly Factor, the Los Angeles Times, Newsday and the Associated Press. He has also appeared on Showtime and in the movie Outfoxed. Follow Peter on Twitter at @peterfhart.

“What you can\’t do is insist that the trust fund is meaningless, because SS is just part of the budget, then claim that some crisis arises when receipts fall short of payments, because SS is a standalone program. Yet that\’s exactly what the WaPo claims.

Pensions are going the way of high-button shoes. Many banks pay less than half of one percent on bank accounts. Individual retirement accounts are subject to the vicissitudes of Wall St. Now comes WaPo to undermine Social Security, one of the greatest achievements of this country, by declaring a crisis. Let’s take the best example of how government policy can work to help people and start unraveling it by distortion.
If the Washington Post is so concerned, why not suggest raising the cap on income subject to the payroll tax? How about an estate tax? WaPo should like that. Solvency problems in Social Security, much bigger ones, have been dealt with before.
If Social Security disappeared tomorrow, or was even reduced for many, the poverty rate among seniors would skyrocket but this is lost on WaPo. This way seniors can all fend for ourselves in an “ownership” society, better known as the “you’re on your own” society, a hallmark of compassionate conservatives.

I will turn 79 in 2036. Given my family history, it’s entirely possible for me to live up to a decade beyond that, and given medical advances, maybe a few years more. I daresay I’d consider a 25 percent reduction in benefits at that point a personal financial crisis.

While it’s true that raising taxes or increasing borrowing is “what the government does whenever someone redeems bonds,” we are currently at a point at which raising general fund taxes would not only be extremely unpopular, it would depress an already weak economy. And our national debt is very nearly equal to our Gross Domestic Product — a point at which it may become impossible to pay off the debt without either defaulting overtly or covertly (via inflation, which btw will cause the trust fund to run dry sooner as cost-of-living adjustments increase payouts). Raising the cap on taxable income for the SS payroll taxes would be fair only if the cap on benefits were raised proportionately, which would cancel-out any advantage to raising the cap. And fairness aside, raising the cap would induce people in that salary bracket to prefer increased non-salary compensation (better health insurance, a company car, stock options, etc.) so that tax receipts would not increase as much as you would think.

I know that for many people, saying anything at all negative about Social Security is like calling their sister a whore. But a most whores are somebody’s sister.

Scott: Social Security is self-funding. It’s not funded by additional taxes from the government. It’s funded by a payroll tax. The U.S. already has one of the weakest, if not the weakest social safety net among all other major industrialized nations. Is it possible to perhaps reduce our debt by not having a military budget that is almost equal to that of the entire world combined? That would be just one way to reduce the debt/deficit.
I don’t agree that if the cap were raised, benefits should be raised beyond what that individual would get. This would open the door to many others who would want the same thing.
Perhaps some would use this as an opportunity to ask for non-salary compensation. Let’s try it anyway and see what would happen.

Scott should know that it is against federal law for SS to draw from the general funds. Scott should also know that the bonds bought with SS taxes are nothing unusal, since the bonds that retirees have bought over the years are the same type of bonds bought up by Japaneses, Chinese, and the Saudi monarchists. These SS bonds and interest are part of a designated fund, even if the fund isn’t isolated in that mythical lockbox demagogues keep talking about. And, the presence of those SS taxes “on budget” reduces the annual deficit, just like the presence of funds from foreign bond sales does. We wouldn’t think of defaulting on our bond obligations to the Chinese, so why even consider defaulting to our own citizens who have bought the same US bonds? SS is cheap to administer and also pays benefits to the disabled and their dependents. It also provides a monthly subsidy (SSI) to those who are disabled but haven’t earned enough quarterly credits to qualify for ordinary SS disablity insurance. The business class feels threatened by Social Security because SS stands as an example of how efficient we can be as a Co-op, as SS delivers $1,000.00 in benefits at a cost of $8.00, less than 1% overhead. They fear that the power of collective action might make them redundant in other crritical areas, such as healthcare. They’d be right.

I heard from the top people how well funded Fanny and Freddy were for the 4 years before they collapsed,taking America a long way down with her.Let us all remain dubious at government accounting promises as well.As a blanket statement I would state that NOTHING is safe.Some people say SS is nothing more than a ponzi scheme and we damn well better wake up to the fact.Some say all is well ,go back to sleep and sweet dreams.Most college grads today feel they will never see a dime of it.Let us all err on the side of caution ,vigilance,and verification of government promises.We have all hear “all is well” before from this lot.

Remember when baby Bush tried to convince us all that SS funds should be steered into the stock market? When the matket later crashed, as it does on a regualr basis, it would have destroyed a lot of the surplus it currently holds.
The Repooplicans are mad as hell that they didn’t get to tear down that system and will do anything to prove that Government doesn’t work, most noteably by being completely and purposefully inept at governing. The strategy goes like this:

Hire morons within your administartion
Allow them to fail in their duties
Hold up their failures as proof that government is the problem.
Rinse and repete.

Good point, Michael. Conservative Republicans hate government, except when it serves their purposes. My feeling is that they hate the notion that people can join together with government to help solve problems in a successful program so it’s time to unravel the program. Government can’t be allowed to succeed in any way.
Ever since the passage of the New Deal, Republicans have been trying to destroy it. Remember Barry Goldwater? His position on Social Security was to destroy it. In fact, he entertained the idea of “abolishing” it during his 1964 presidential campaign.
David Stockman, one of Reagan’s advisors, called disability benefits a “powerful temptation to the shiftless” and some were trying, even then, to balance the budget off the backs of the elderly.
Then came George W. Bush and a push to privatize and send the money to Wall St. Now renewed calls to privatize or weaken the program or isolate age groups to do so.

If social security is so bankrupt then I expect a full return of my total lifetime contribution. It has obviously been mis-appropriated illegally from my paycheck into something other than Social Security. I call that bait and switch.

michael e- The reason “Most college grads today feel they will never see a dime of it,” is because the Righties have repeated their lies about SS so often. Check this out: http://www.youtube.com/watch?v=SaymnCuwmS0
It will also give you some insight into how the Koch brothers influence you, though you think they don’t.

Martha and Elaine I won’t stand up for the Republicans or Bush.Bush was no conservative.Come to think of it neither were many Republicans.And both were as bad at times as any Democrat.They can take some of the blame too for sure.
But moving on….Martha most College grads have been taught by 99% liberal profs.So blaming what is filling their minds of mush on two brothers is a little……..Those who go to more conservative schools believe that SS can be saved(for them) polls have shown.They are far more positive about the economy en total.
Elaine some of Bushes people were honest that SS is in fact a giant ponzi scheme.Very little is in fact in a lock box.I admit they did flail about a bit with ideas to save it.
Please don’t believe so strongly in the NEW Deal.Many economists have proffered good evidence that it was THE reason the great Depression lasted so long and became so entrenched.I believe that point of view.One man digs a hole ,the next fills it in.Though one must admit the publics works program accomplished good things.Still ways to do that in a very profitable way.Regulations(endless)today of course make it impossible.Remember we made the Empire state building in 18 months then.Today we have not yet past the zoning regulations on ground zero(Trump).90 years of liberal idealism Larry

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